NWA merger might spur local competition

A merger between Northwest Airlines and Delta Air Lines could stimulate more low-fare competition in their hubs, because the combined airline likely would shed some flights on overlapping routes.

Terry Trippler, a Minneapolis-based airline expert, said a Delta-Northwest merger might prompt AirTran Airways to expand in Northwest's Twin Cities, Detroit and Memphis hubs where AirTran already offers daily service to Atlanta.

"If AirTran sees an opening, they are going to be there," Trippler said.

He released a hub-to-hub comparison on Wednesday in which he examined the number of daily flights offered between Northwest's three domestic hubs and Delta's domestic hubs in Atlanta, New York-Kennedy, Cincinnati and Salt Lake City.

For example, Northwest operates five daily flights between the Twin Cities and Atlanta with mainline planes, while Delta offers seven flights on that route -- five with regional jets and two with larger airplanes. AirTran operates three daily flights.

Trippler said AirTran could broaden its flying to the Twin Cities if a combined Delta-Northwest elected to reduce its seats in the market or was ordered to do so by the U.S. Justice Department.

In the Twin Cities-New York/JFK market, Trippler said Sun Country Airlines is now offering one flight a day, while Northwest is operating three flights with mainline jets.

Frequent fliers and business travelers want more flight frequencies, so some potential Sun Country customers are not flying on the Mendota Heights-based carrier, Trippler said.

Like other industry analysts, Trippler envisions service reductions for Delta's Cincinnati hub and Northwest's Memphis hub in a Delta-Northwest merger.

A Delta-Northwest deal also could prompt Southwest Airlines to consider entering the Twin Cities and Atlanta markets, Trippler said. He suggested that Southwest could launch service between the Twin Cities and Salt Lake City, Kansas City, Mo., and Chicago's Midway Airport.

U.S. Rep. Jim Oberstar, D-Minn., said Wednesday that he doesn't favor any mergers now because "we have an appropriate balance of competition in the aviation market."

Oberstar, chairman of the House Transportation and Infrastructure Committee, met with two Northwest executives Tuesday about the carrier's merger talks with Delta and the effects of a Delta-Northwest deal.

"We did not deregulate aviation in 1978 to create consolidation of the industry, but rather to expand competition," Oberstar told reporters Wednesday.

Asked whether he would oppose a Delta-Northwest deal, Oberstar said, "I don't think mergers are in the best public interest, and that includes this one."

While a merger might increase competitors' flights into the Twin Cities, a Delta acquisition of Northwest likely would mean the closing of the Northwest headquarters in Eagan, which has 1,050 employees. Northwest also has workers in two other buildings, bringing its total employment in Eagan up to 2,300.

Delta CEO Richard Anderson, who led Northwest from 2001 to 2004, has said that Delta will retain its headquarters in Atlanta in any merger.

Anderson's counterpart, Northwest CEO Doug Steenland, has not commented on the headquarters issue in recent communications to employees. But Steenland repeatedly has said that Northwest wants to be in control of its own destiny, so he and his board have contemplated multiple merger options.

Separately Wednesday, Northwest learned of another delay affecting production of Boeing's new 787, for which Northwest is supposed to be the U.S. launch customer. Boeing said it is struggling to meet production deadlines for the 787, called the Dreamliner, and it needs another three months to get the initial planes to foreign carriers.

Northwest had planned to put its first plane into service this coming October. Last fall, Boeing said that it would have to delay delivery of the first 787s to international customers by six months.

Northwest has envisioned using the 221-seat Dreamliner for a nonstop Detroit-Shanghai route beginning in late March 2009. Now it's unclear whether Boeing will deliver a plane to Northwest in time for the route launch.

"I seriously doubt that the Dreamliner will ever have a red tail," Trippler said.

Liz Fedor • 612-673-7709